With China Expansion, Prada May Encounter Consumer Limitations

Not All Chinese Consumers Are At Same Stage Of Brand Education Prada store in Hong Kong China is clearly an important market for Prada, as its recent Hong Kong IPO and ambitious expansion plan would attest. The first Italian luxury brand to list in Hong Kong, Prada is looking to more effectively tap China's growing consumer market while offsetting stagnant or shrinking demand in traditional markets like Europe and North America. According to industry estimates, the Greater China region now accounts for as much as 19 percent of Prada's global sales, and the label plans to open 12 new China outlets in the next three years. With its growth in traditional markets like Italy and the United States slowing to a crawl, it's not terribly surprising that Prada is rushing to China. But this week, the Chinese news source claims that some Prada buyers in China have lodged complaints about products they've purchased from the label, in a story that reflects the fact that some luxury buyers in China are less educated about things like post-sale service and maintenance. (Yet these shoppers are sometimes quick to appeal to the press, a fact of which luxury brands need to be mindful.) From the article (translation by Jing Daily team): Chinese shopper Lily Qin bought a Prada bag earlier this year in Frankfurt, Germany. After returning home, she used a well-known leather care solution to clean the bag, which caused the bright yellow sheepskin accents of her bag to fade. As Qin told a reporter, "I just used this bag a few times, and have never had this kind of issue before with any of my other bags." When asked about the issue, a Prada staff member told reporters, "Our bags cannot be washed by leather care solutions. They have to be sent to special maintenance centers." Similar quality issues have been reported not only in Prada bags but other brands as well. This year, a large number of Chinese consumers complained about Louis Vuitton's after-sales service, and on March 15 (China's Consumer Rights Protection Day), the Industry and Commerce department of Zhejiang province said that international high-end brands like Hermes, Hugo Boss, Dolce & Gabbana and Versace had failed quality control examinations. While the legitimacy of Lili Qin's complaint is suspect, as we don't know anything about the cleaning solution she used, and Prada doesn't recommend the use of similar solutions anyway, the fact that stories like this are out there in the Chinese-language news is important for brands to know. This is particularly true for a very public label like Prada, which is pinning much of its strategy on China at the moment. As Jing Daily has previously noted, in addition to its store expansion in China, Prada plans to open a design studio in Hong Kong later this year, and hopefully the label will boost its after-sales service and after-sales service education in China as well. Although stories that focus on one disgruntled shopper -- even if she is potentially to blame -- aren't important in the long run, the fact that these individuals get face time with Chinese reporters makes brand education that much more important in China.

With China Expansion, Prada May Encounter Consumer Limitations

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Published June 24, 2011

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With China Expansion, Prada May Encounter Consumer Limitations